Competition Bureau appeals decision in Canada Pipe case

OTTAWA, March 7, 2005 — The Competition Bureau announced today that it has appealed to the Federal Court of Appeal the Competition Tribunal's decision that Canada Pipe Company Ltd. had not abused its dominant position in Canada.

"This decision raises key legal issues related to the Bureau's mandate to pursue dominant firms that engage in anti-competitive behaviour," said Sheridan Scott, Commissioner of Competition.

The Bureau's position is that:

• the Tribunal erred by failing to apply the correct test in its determination that Canada Pipe's Stocking Distributor Program (SDP) does not constitute an anti-competitive act;
• the Tribunal erred by failing to properly consider whether the SDP preserved or enhanced Canada Pipe's market power, or impeded the entry or expansion of competitors, in the relevant markets.

On February 3, 2005, the Tribunal concluded that Canada Pipe exercised market power, which is the ability to set prices above competitive levels for a considerable period of time, in the cast iron pipe, fittings and mechanical joint couplings for drain, waste and vent applications across Canada. However, the Tribunal also found that Canada Pipe had not engaged in a practice of anti-competitive acts and that even if it had, the practice would not likely have had the effects of preventing or lessening competition substantially in the relevant markets. The Tribunal also found that the SDP has not impeded entry of firms in a market or led to any other exclusionary effects.

"When used by dominant firms, loyalty programs can exclude entry and expansion in the market and result in higher prices for consumers," says Sheridan Scott. "Clarity of the law with respect to loyalty programs such as Canada Pipe's Stocking Distributor Program is of fundamental importance to our enforcement of the exclusive dealing and abuse of dominance provisions of the Competition Act."

On October 31, 2002, the Commissioner of Competition filed an application before the Competition Tribunal for an order prohibiting Canada Pipe Company Ltd, through its Bibby Ste-Croix Division, from engaging in anti-competitive acts, in this instance exclusive dealing through its SDP, acquisitions of rivals and unreasonable restrictive covenants.

The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

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